Focal point

Ms. Nguyen Thien Phuong

Deputy Director

Department of International Cooperation

Vietnam Environmental Administration (VEA), MONRE

SWITCH-Asia RPSC

Under SWITCH-Asia’s Regional Policy Support Component, UNEP is implementing a range of coordinated SCP activities in Viet Nam. For this policy support, UNEP’s main partner in Viet Nam is the Viet Nam Environmental Administration of the Ministry of Natural Resources and Environment (MONRE).

Based on the SCP policy needs assessment, Viet Nam has decided to start their SCP policy support with the following activities:

Finalizing the draft of National Action Plan on SCP including expert and ministerial consultations

Organizing the 6th National Roundtable on SCP

Undertaking a feasibility study on SCP indicators for Viet Nam.

The following areas have been identified as additional areas for capacity building and policy support on SCP after a comprehensive needs’ analysis in the country and currently, discussions are underway to broaden policy support activities in 2015 and 2016.

Investment and Finance

In terms of policy support issues in relation to finance and investment, a main focus should be on instruments to support implementation of SCP and CP initiatives and whether or not this would require access to special low interest loans or special green investment criteria.

A second important issue for making SCP and CP central to business is enhancing the capacity of business to invest in greener and cleaner technologies.

A range of instruments could be supported including tax and pricing policies, and incentives for green investment

Partnerships between Government, Research and Industry

The main support required in this area is the need to create better partnerships between government, research and development and the market. The aim is not only to mobilize funding for research and implementation, but also to ensure greater implementation of new SCP designs and SCP technologies. Mobilizing funding in a partnership with business would also increase the possibility of commercialization of SCP innovations.

Education and Training

Raising awareness of SCP (a major capacity gap), among consumers, business and ministries will require a big national campaign on SCP with many elements. For instance, this may require guidelines for consumers to help them in their buying decisions, but also guidelines covering investments by business and government.

This might be coordinate with the development of a National Action Plan on SCP education to promote SCP principles and practice, at all levels from consumer, business to Government, across the country were advocated.

There is an additional need for increased SCP technical expertise to assist in SCP implementation and to demonstrate the benefits of SCP for businesses and specifically for SMEs

Regulations and Laws on SCP

A variety of laws and regulations have been identified as potential instruments to support SCP. Green public procurement and environmental tax reform are two big priorities.

These could be complimented with guidelines for different sectors of the economy on SCP skills and best practice and setting policy priorities to support green investment.

Other tools could include regulations on implementing energy audits, recycling construction materials and promoting new technologies for processing waste.

Status of SCP policy framework

Following successful economic policy reform in the 1980s, Viet Nam has developed rapidly over the last two decades reaching high GDP rates between 2001 and 2010. These consistently high rates of economic growth mean that Viet Nam officially graduated to middle-income country status in 2010. Viet Nam is undergoing a fundamental structural shift in its economy, away from the agricultural, forestry and fisheries sector towards industry and services (Dore et al., 2008). A policy of rapid industrialization is being pursued by the government as a means of achieving socio-economic objectives.

SCP is still relatively a new concept in Viet Nam. Early efforts focussed on cleaner production, but now MONRE is supporting a more holistic perspective that takes into account consumption side policies. The government is currently in the process of finalising a National Action Plan on SCP that aims to coordinate efforts. In addition, SCP-related objectives are integrated into several national policies and regulations, including the new National Action Plan on Green Growth, the Socio-Economic Development Strategy and Plan, and the National Strategy on Cleaner Production.

Vietnam released on 11 January, 2016 a National Action Plan on SCP which sets goals for 2020 and a vision for up to 2030. The Ministry of Industry and Trade (MOIT) is the national focal point for this Action Plan and has responsibility to organise and cooperate with relevant ministries and agencies to implement it. In the Plan, the Vietnam Government sets out 9 main priority activities:

Develop and improve legal framework and policies to implement sustainable production and consumption

Raise awareness and implementing capacity of sustainable production and consumption to all stakeholders

The Vietnam Government is currently mobilizing funding from donors, including UNEP, for the implementation of both technical and financial assistance.

The Action Plan links to the following key established policies, plans, and laws in the country, among others cited in the 2011 UNEP policy needs assessment, as well:

The 10-year Socio-Economic Development Strategy (SEDS) and the 5-year Socio-Economic Development Plan (SEDP). Viet Nam’s SEDS places greater emphasis on sustainable development and includes more determined steps toward the establishment of a low-carbon economy. SEDP does not explicitly mention SCP, however an important SCP-related objective included in SEDP states that “ harmony between population growth, urbanization, socio-economic development and environmental protection’ is sought to be achieved.

National Strategy on Cleaner Production until 2020. This strategy was adopted in 2009, it seeks to achieve the wide application of SCP in industrial enterprises to improve the efficient use of natural resources while reducing waste and pollution, improving environmental quality and human health, and ensuring sustainable development.

In 2010, the government adopted a regulatory instrument to foment governance on consumer protection. The “Law On Protection Of Consumer's Rights” in Article 9 explicitly mentions the linkages of consumer purchasing on the environment, but squarely places the responsibility of consumption impacts on consumers only, as a consumer obligation. Further, inclusion of the role of producers or “sellers” as having obligations to ensure products sold do not negatively impact the environment is also needed. However, the law does provide a comprehensive linkage to health and environmental impacts of unsustainable consumption already.

(Source: Article 9 on Obligations of Consumers “1. Checking before receiving the goods; selecting and consume goods and/or services with clear origin or source, without cause harm to the environment, contrary to the fine customs and social morals, not causing harm to their lives or health and that of others; observing precisely and fully the manual of goods and/or services.” Available here.)

National Green Growth Strategy & National Action Plan (NAP) on Green Growth 2014-2020. This strategy was adopted in March 2014 and is undergoing translation and final publication. The strategy especially promotes Sustainable consumption (Theme 04: Greening lifestyle and promoting sustainable consumption) with 13 activities. In addition, it promotes other linked activities such as consumer information (eco-labelling) for energy conservation practices. All SCP activities undertaken in Viet Nam are cross-referenced and linked to ensure the NAP on Green Growth is complementary to SCP activities.

The following are also policies which can or are already advancing SCP practically in the country’s governance framework:

General Management Strategy on Solid waste to 2015, vision to 2050 (2009)

National Eco-innovation Policy (under development with support by UNEP)

National Strategy on Environment protection to 2020 and orientation to 2030 (2012);

Energy: Law on Energy efficiency and conservation (2010)

Environment Protection law (2014). The law in article 5, Item 5, explicitly mentions the need for special support in finance and land for activities relating to environment protection, for environmentally friendly manufacturing units and businesses and in article 151 the need for support for environmental protection activities.

Resource consumption and production

Main Resource Consumption and Resource Efficiency Indicators (2010)

Population (millions) 89.047 GDP (billion USD) 78.282 GDP is in USD exchange rate based on year 2005 and deflated. Source: UNSD database

DE: Domestic Extraction;
MI: Material Intensity of the economy;
MF: Material Footprint.
All other abbreviations explained in the table above

Panel a) shows Viet Nam’s DMC increasing by a factor of eleven, closely followed by GDP. Increases in TPES and GHGs were less than half this, while population which doubled. Panel b) shows a strong and consistent increase in DE per capita beginning in the late 1980s, contemporaneous with the start of the period of economic reforms under Doi Moi. In Viet Nam’s case, growth in DE is roughly in proportion to economic growth since the 1990s, and growth in the non-biomass categories has outstripped growth in GDP. Comparing DE to the MF per capita in panel c) shows an unusually close match between both measures, such that Viet Nam appears notionally largely self-sufficient both in gross terms, but also within the four specific materials subcategories. Panels d), e) and f) show per capita consumption and GHG emissions have increased strongly on all measures. Panel d) shows a strong increase in both MI and adjusted MI from 1990 to 2010, indicating economic growth is becoming less eco-efficient with regard to raw materials. Panel e) presents conflicting data on energy intensities, with substantial improvement on conventional measures, but a major deterioration (increase) on the adjusted EI measure. Another interesting feature of panel e) is the degree to which footprint based and conventional measures are converging over time. Panel f) indicates that GHG emissions intensity have decreased on both footprint based and conventional measures. Conventional indicators appear to overstate materials and energy consumption, and understate GHG emissions, relative to footprint based measures.

(Source: UNEP CSIRO Indicators for a Resource Efficient and Green Asia and the Pacific, 2015).

The information in the country profiles herein have been obtained through research with firsthand and secondhand sources. The information presented herein cannot be considered as official policy of governments or other official bodies. The SWITCH-Asia Programme cannot be held responsible for the content of the sites to which it provides links or for the availability of servers or links. Information is being continuously updated in order to maintain an up to date country profile. If you would like to contribute information for this profile or have any further comments, please send an email to: SWITCH-PSC@unep.org

Status

Introduction

The Vietnam Chamber of Commerce and Industry (VCCI) from September 2015 stated that SMEs accounted for 98% of businesses operating in the country, provided 51% of jobs and generated more than 40% of Vietnam’s GDP.

SME make up 31% of industrial production, 78% of total retail sale turnover and 64% of passenger transport both within and outside of Vietnam (VCCI, cited from Vietnam News 2015).

Promoting the SME sector has been on the agenda of the Government of Vietnam for over a decade and the respective legal infrastructure is slowly being built. Climate change and, more recently, green growths have been added to the priorities for development planning.

Regarding the actual number of SMEs, available data is inconsistent – according to the General Statistics Office (GSO) only 325,000 enterprises were registered and active at the beginning of 2012, in­cluding 67% micro, 29% small, 2% medium and 2% large enterprises2 (GSO 2013, cited from AED 2014).

Main SME legislation:

Decree 56/2009/ ND-CP (2009)

The second Five Year SME Development Plan (2011-2015)

Current SME financing developments

The three most important sources of finance for SMEs generally were formal loans, retained earnings and in­formal loans in 2009-2013, and bank loans made up the most important source of funding for SMEs.

Funding is often provided to national banks by international finance and donor organisa­tions for on-lending to SMEs.

The State Bank of Vietnam promulgated guidelines to enhance green credit growth and environmental-social risk management in March 2015

Until now, bilateral and interna­tional cooperation has proven to be an important fac­tor in designing and enhancing the outreach of green lending programmes.

Non-bank financial institutions are still in a nascent stage. Microfinance institutions (MFIs) and financial leasing companies cater mainly to micro or large enterprises, respectively.

Obtaining capital through the equity and bond market also plays a sub­ordinate role for the majority of SMEs. It can be considered beneficial for SMEs’ access to finance that the availability of venture capital has increased lately.

Challenges

SMEs lack tech­nical, financial and knowledge capacities for minimising the environmental impacts of their production

Vietnam Green Credit Trust Fund (VGCTF). This fund supports medium- and long-term investments of Vietnamese SMEs in cleaner produc­tion technology. It is financed by the Swiss Secretariat for Economic Affairs and coordinated by the Vietnam Cleaner Production Centre. The VGCTF cooperates with three com­mercial banks (Techcombank, Asia Commercial Bank, Viet­nam International Bank) to provide loan guarantees and performance-based grants. The VGCTF guarantees 50% of the capital borrowed by SMEs. For obtaining a guarantee at least 50%, the SME’s shares must be held by Vietnam­ese shareholders and the loan amount must be in the range of EUR 9,000 – 942,000. Projects qualify if they are related to climate change mitigation and adaptation, en­ergy efficiency, fuel switching, low-carbon development, water efficiency and technology change. Similar to the GIF, the VGCTF also reimburses the borrower part of the investment costs after the successful installation of the cleaner production technology, if the borrower can dem­onstrate a reduction of negative impacts on the environ­ment (Climate Finance Options, n.d.).

The Green Investment Facility (GIF)

One of the most interesting projects with regard to access of SMEs to green finance in Vietnam. Supported by the Danish Government, the GIF aims at promoting the uptake of energy ef­ficiency measures by SMEs in the brick, ceramic and food processing sectors.

The GIF offers loan guarantees and grants for SMEs with fewer than 300 employees that invest in energy ef­ficiency measures. In order to be eligible for funding, the planned measure should reduce the company’s energy consumption or greenhouse gas emissions by at least 20%. The investment sum has to be between VND 400 million and 4 billion (EUR 17,000 – 165,000). If these conditions are given, GIF can guarantee 50% of the value of a loan. A unique feature of the programme is that the loan guarantee can be given to any bank in the Vietnamese market – it is not restricted to certain financial institutions. If the savings achieved through the investment ex­ceed 20%, the SME will receive a grant covering between 10 and 30% of the borrowed amount depending on the savings achieved (Green Investment Facility 2015, Ministry of Foreign Affairs Denmark et al. 2015).

The GIF is expected to promote access to finance for about 160 SMEs. In June 2015, around 90 companies had contacted the project, out of which eight were waiting for loan approval. Total fund volume amounts to VND 110 billion (EUR 4.5 million) (MoIT 2015).

Status and policies

GHG emissions data

2015 total territorial GHG emissions[1]* (excluding land use change and forestry): 312 MtCO2

2015 territorial GHG emissions per capita: 4.6 tCO2/person

2014 CO2 consumption emissions:[2] 307 MtCO2

*GHG territorial emissions are Carbon dioxide emissions from the use of coal, oil and gas (combustion and industrial processes), the process of gas flaring and the manufacture of cement.

Industries’ contribution to climate change

Vietnam’s CPEIR Report states: “Official projections of Vietnam’s energy emissions show a fourfold increase between 2010 and 2030, and total net emissions will grow threefold over that period. This is mainly due to the estimated increase in coal use for power generation, as its share in the power generation mix is expected to triple from 17% in 2010 to 58% in 2030.”[1]

Emission intensity per unit of GDP will be reduced by 20% compared to the 2010 levels

Forest cover will increase to the level of 45%.

Conditional contribution: The above-mentioned 8% contribution could be increased to 25% if international support is received through bilateral and multilateral cooperation, as well as through the implementation of new mechanisms under the Global Climate Agreement, in which emission intensity per unit of GDP will be reduced by 30% compared to 2010 levels.

Government financing for climate change related initiatives

The National Committee on Climate Change (NCCC) – established in 2012 to lead, coordinate, and monitor climate change efforts

The National Target Program to Respond to Climate Change (NTP-RCC) – to mainstream climate change into social and economic policies. In December 2008, the GoV approved a total budget of 1,965 billion VND (88 million EUR) for 2009-2015.

The National Target Program on Energy Efficiency and Conservation (NTP-EE)

The Support Program to Respond to Climate Change Financing Mechanism (SP-RCC FM) – a financing mechanism to scale up climate change responses and coordination of policy development. Has allocated VND 17,900 billion for 61 selected projects (over a lifetime) and will finance 80% of the projects, with the rest financed by the provinces.[2]

As of June 2015, Viet Nam had 254 Clean Development Mechanism (CDM) projects accredited and registered by the CDM Executive Board (EB). Viet Nam is ranked number four internationally for number of projects, with a total GHG reduction amount of approximately 137.4 million tCO2e in the credit period.[3]

Other climate change mitigation efforts to be implemented, as stated in its INDC:[4]

1. Strengthen the leading role of the State in responding to climate change

4. Promote effective exploitation and increase the proportion of new and renewable energy sources in energy production and consumption

5. Reduce GHG emissions through the development of sustainable agriculture; improve effectiveness and competitiveness of agricultural production

6. Manage and develop sustainable forest, enhance carbon sequestration and environmental services; conservation of biodiversity associated with livelihood development and income generation for communities and forest-dependent people

Climate change impacts

Vietnam is very prone to natural disasters and climate change impacts as it is located in a tropical typhoon belt. The population is 95 million and Vietnam also has the highest population density in Southeast Asia after Singapore, with a national average of 232 people/km2.[1] Agriculture, forestry and fishing, which are sensitive to climatic changes, still collectively contribute 21% of GDP and employs over 47% of the country’s labor force. Vietnam and the Mekong Delta is very vulnerable to sea level rise; a rise of 1 meter could result in 5% of land loss, affect 11% of the population, and adversely impact 7% of agricultural activities resulting in total loss of 10% of GDP.[2] Climate change adaptation is vital for Vietnam and is regarded by the Government as one of the priority tasks to reduce the vulnerability level.

Economic, social, and environmental impacts of climate change

Extreme events like floods and storms damage infrastructure and facilities

Interruptions to business transactions

Transport and logistics routes are damaged or disrupted

Heightened price and market volatility

Impacts on employees and consumers – lack of access to basic goods and services

Lack of water and energy availability affect operations and productions

Health issues from heat waves and increase of disease will cause decreases in labor and work production

Increased flooding risk to cities – “100 cm of sea level rise over 10% of the Red River Delta and Quang Ninh province, more than 2.5% of the area of the central coastal provinces, and over 20% of Ho Chi Minh City will be at risk of being inundated, directly affecting 9% of the population of the Red River Delta and Quang Ninh province, nearly 9% of the population of the central coastal provinces and approximately 7% of the population of Ho Chi Minh City"[1]

Agriculture:

4 million people live in the Mekong Delta and it currently produces 13% (62 million tonnes) of the world’s rice; projections show a loss of 2.7 million metric tonnes per year from temperature rise and climate change.[2]

Drought, and a 2 degree Celsius rise in temperature will reduce coffee yields; especially decreases in precipitation in the Central Highlands will also have large impacts since 90% of water usage in the region is used for coffee production.

Changing rainfall patterns, inundation, and waterlogging will reduce rice production, with estimated reductions of 9.1 million tonnes annually by 2050.

Sugarcane losses are estimated at 3.7 million tonnes.

Maize losses are estimated at 1.1 million tonnes and cassava at 1.9 million tonnes.

Vietnam is the second largest producer of coffee globally; Vietnam’s coffee production accounts for 17% of global production and provides over 1 million jobs.

550,000 smallholder farmers supply over 95% of Vietnam’s coffee, and another 500,000 people are engaged in seasonal work.[3]

Loss of cultivable land from inundation and saline intrusion.

Increase of pests

Water scarcity:

Climate induced water shortages will affect river flow; the Mekong River is at its lowest recorded levels ever due to the severe drought in 2016